Aims. The purpose of this study was to determine the impact of the removal of total knee arthroplasty (TKA) from the Medicare Inpatient Only (IPO) list on our Bundled Payments for Care Improvement (BPCI) Initiative in 2018. Methods. We examined our institutional database to identify all Medicare patients who underwent primary TKA from 2017 to 2018. Hospital inpatient or outpatient status was cross-referenced with Centers for Medicare & Medicaid Services (CMS) claims data. Demographics, comorbidities, and outcomes were compared between patients classified as ‘outpatient’ and ‘inpatient’ TKA. Episode-of-care BPCI costs were then compared from 2017 to 2018. Results. Of the 2,135 primary TKA patients in 2018, 908 (43%) were classified as an outpatient and were excluded from BPCI. Inpatient classified patients had longer mean length of stay (1.9 (SD 1.4) vs 1.4 (SD 1.7) days, p < 0.001) and higher rates of discharge to rehabilitation (17% vs 3%, p < 0.001). Post-acute care costs increased when comparing the BPCI patients from 2017 to 2018, ($5,037 (SD $7,792) vs $5793 (SD $8,311), p = 0.010). The removal of TKA from the IPO list turned a net savings of $53,805 in 2017 into a loss of $219,747 in 2018 for our BPCI programme. Conclusions. Following the removal of TKA from the IPO list, nearly half of the patients at our institution were inappropriately classified as an outpatient. Our target price was increased and our institution realized a substantial loss in 2018 BPCI despite strong quality metrics. CMS should address its negative implications on bundled payment programmes. Cite this article: Bone Joint J 2020;102-B(6 Supple A):19–23

Aims

There is concern that aggressive target pricing in the new Bundled Payment for Care Improvement Advanced (BPCI-A) penalizes high-performing groups that had achieved low costs through prior experience in bundled payments. We hypothesize that this methodology incorporates unsustainable downward trends on Target Prices and will lead to groups opting out of BPCI Advanced in favour of a traditional fee for service.